Preferreds erase early gains, end lower; Fed decision looms; Wells Fargo to list on NYSE

By Stephanie N. Rotondo

Phoenix, Sept. 15 – The preferred stock market was looking to gain ground in early Tuesday trading but turned negative in the afternoon.

“It started up and mostly slid south over the course of the day,” a market source said. The market’s real weakness came “when the Treasury market really started to tank as well.”

The source attributed the declines to “Fed speculation,” referring to the Federal Reserve’s upcoming two-day policy meeting in which the central bank could raise interest rates for the first time since 2008.

The source also noted that volume was “really light,” given the looming Fed decision.

“Most things are going to be on hold until the Fed makes the announcement of whatever it is that they are going to do,” he said.

The Wells Fargo Hybrid and Preferred Securities index ended off 4 basis points. The index was up 4 bps at mid-morning.

There was, however, ongoing fairly active trading among recently priced deals.

A trader reported that Wells Fargo & Co.’s new $900 million issue of 6% series V class A noncumulative preferreds were going to begin trading on the New York Stock Exchange on Wednesday.

The ticker symbol will be “WFCPV.” The deal came Sept. 8.

In Tuesday trading, the issue was quoted at $24.98 bid, $25.05 offered early in the day, though the shares ended a penny weaker at $24.98.

In the San Francisco-based bank’s older issues, the 8% series J class A noncumulative preferreds (NYSE: WFCPJ) were also a penny lower at $27.76.

As for AmTrust Financial Services Inc.’s $125 million of 7.5% $25-par subordinated notes due 2055 – a deal priced Wednesday – they were meantime seen around $24.57.

A trader said that issue might also be hitting the NYSE under the ticker symbol “AFST,” though that was not confirmed.

And rounding out last week’s string of new deals, Qwest Corp.’s $400 million of 6.625% $25-par senior notes due 2055 – a deal priced late Thursday – were pegged at $24.60 bid, $24.62 offered at mid-morning. The notes closed at par.

“It was all over,” a source said of the deal, noting that the volume weighted average price was $24.61.

Qwest’s 6.125% $25-par notes due 2053 (NYSE: CTY) were down 2 cents at $24.14.

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